De-risking drives reinsurance market stability

Current claims activity is increasingly influenced by medium-sized events.

The shift in the global reinsurance market has moved towards a positive outlook, attributable to the improved underwriting margins, which are expected to remain sustainable over the next few years if current discipline is maintained, AM Best said.

Reinsurers have refocused on providing capital protection rather than stabilising earnings, following several years of underperformance. This change has been driven by a series of de-risking measures, tighter contract terms, and a move away from high-frequency layers.

Current claims activity is increasingly influenced by medium-sized events and secondary perils, rather than large-scale disasters. Hard pricing conditions are expected to persist longer than in previous cycles, supported by robust capitalisation within the sector.

Despite significant losses in the second quarter of 2024, including the collapse of the Baltimore Bridge, reinsurers are on track for another profitable year. Whilst  the rate of price increases has slowed, the market remains strong, with concerns focused on legacy US casualty and life insurance portfolios.